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Health Care Pay for Performance

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"Pay for performance" rewards doctors, hospitals, and other health care providers for attaining targeted service goals, like meeting health care quality or efficiency standards. RAND research has explored a range of policy and economic implications related to the use of pay-for-performance delivery models.

Public and private sector purchasers are actively working to design value-based payment programs to achieve the goals of improved quality and more efficient use of health care resources. How these programs are designed is a complex undertaking and one that will determine the likelihood of their success.

When it comes to health policy, there are two basic approaches: (1) cautious and careful, or (2) disruptive and daring. The former is less threatening, but what might happen if decision makers were more driven by creativity and less concerned about regulations?

Expanded use of clinical process-of-care measures to assess the quality of health care in the context of public reporting and pay-for-performance applications led to a desire to demonstrate its value in terms of improved patient outcomes.

Changing health care pay-for-performance programs to account for differences among providers in their patient characteristics can make the incentive schemes more equitable and avoid a redistribution of resources away from providers who care for socioeconomically disadvantaged patients.

Changing health care pay-for-performance programs to account for differences among providers in their patient characteristics can make the incentive schemes more equitable and avoid a redistribution of resources away from providers who care for socioeconomically disadvantaged patients.

Patient experience with care is an essential element in any assessment of health care quality. Surveys give patients a voice and provide fair and relevant indicators that complement other metrics of health care quality to inform patients' choices and providers' decisions about how to improve care.

To help the Department of Health to determine the value-added and feasibility of social impact bonds, researchers are exploring whether SIBs help achieve better health and social care outcomes, and what the costs and challenges are of using these funding mechanisms.

Physician payment policy is shifting from one that incentivizes the delivery of more services without regard to quality or outcomes to one that incentivizes the delivery of high quality, resource conscious health care. Thoughtful incentive design can ease the transition process for both physicians and the Medicare program.

The American College of Physicians recently launched its High-Value Care Initiative to help physicians and patients understand the benefits, harms, and costs of interventions and to determine whether services provide good value.

Alignment with best P4P practices varies across Medicare programs; the program for Medicare Advantage aligns most strongly. It is unclear which P4P design elements are critical for quality improvement. Unintended consequences of design features are poorly understood.

Under bundled payments, doctors, hospitals, and other providers share one fee for treating all aspects of a procedure such as a hip replacement or a chronic disease like diabetes. The approach should eliminate unnecessary care and improve quality, but putting it into practice is proving to be more difficult than anticipated.

This white paper prepared for the Agency on Healthcare Research and Quality examines methodological issues raised by the generation of public-reporting of scores for measuring health care provider performance.

Germany's National Association of Statutory Health Insurance Physicians is looking to develop a unified reimbursement framework that accounts for regional prices and incorporates quality indicators. Research by RAND Europe has informed the development of the quality component of the proposed framework.

As the health care industry, employers, and government officials seek to control the growth of health spending, new efforts are needed to develop and refine quality-of-care and other performance measures that can assure changes will improve medical care and do not harm patients.

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Researcher Spotlight

Statistical Project Associate

Megan Mathews is a statistical project associate in the Statistical Research and Consulting Group at the RAND Corporation. She has provided analytical input on health research topics related to pay-for-performance, quality of care, and patient satisfaction. Mathews has experience applying a wide…

Senior Natural Scientist

Mark Friedberg is a senior natural scientist at the RAND Corporation, practice lead in payment models and health care delivery for RAND Health Advisory Services, and a practicing general internist. His research focuses on performance improvement by health care providers, innovations in primary…

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